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Feudalism Unmodified: Discourses on Farms and Firms

The regulation of firm size and structure, in agriculture and industry, assumes that certain forms of market structure and industrial organization are economically or socially pernicious. Large farms and large firms, according to this view, are reservoirs of economic and social evils. The law often targets these purported evils by restricting the formation and structure of firms. Structural regulation exploits the connection between the internal firm organization and overall market structure. Structural regulation disrupts the formation of firms so large that the size and scope of their activities favor sharp distinctions between labor, management, and capital.

In agriculture, one of the most rigorously regulated and structured economic sectors in America, critics have decried the reemergence of feudalism. We shall borrow the epithet feudalism as a term embodying the worst fears urging the rigid structural regulation of free enterprise.

This article first examines the regulation of feudalism in its native setting, the farm. Barriers to external investment and involvement in farming have not shielded agriculture from its natural tendency toward a feudal market structure.

This article then studies the law's frontal assault on industrial feudalism: anti-takeover statutes. Like their agrarian counterparts, these laws have succeeded in destroying wealth without significantly affecting the terms by which firms organize themselves and shape economy at large. Whether manifested on the farm or in the firm, modern feudalism resists structural regulation.

To advocates of free enterprise, feudalism unmodified is a battle cry, a celebration of the inequality that makes economic progress possible. But feudalism unmodified also describes the dismal condition of capitalism and its discontents. Those who would protect weaker competitors at the expense of competition lament the failure of structural regulation. No amount of legal resistance can preserve small farms and small firms. Feudalism endures, unmodified.